Summary of the Lawsuit

This lawsuit, entitled Barnes v. AT&T Pension Benefit Plan – NonBargained Program, No. 08-04058 EMC (N.D. Cal.), alleges that certain participants of the Pacific Telesis Group Cash Balance Plan for Salaried Employees (the “PTG Pension Plan” or “Plan”) who received a discounted Accelerated Transition Benefit (“ATB”) at their first termination and subsequently bridged their service by returning to work for a participating company were entitled to an adjusted or redetermined ATB upon their second termination.

Summary of the Claims

In 1996, Pacific Bell (“PacBell”) and other affiliated companies began offering an ATB to terminating employees. Under the terms of the Plan, an employee who terminated employment at less than 55 years of age with 20 years of service was entitled to a discounted ATB to reflect his or her age and service at the time of termination. Plaintiff alleges that pursuant to Section 3.4(d)(3) of the Plan, if an employee who retired after March 31, 1996 was subsequently rehired before October 31, 1997 and worked 5 additional years, the employee “bridged” his or her service and was entitled to (a) a “Redetermined” ATB calculated on the basis of the employee’s age and service at the time of his or her next termination plus (b) the greater of a cash balance (“CB”) benefit or (after 2001) a CAM benefit. Plaintiff alleges that the administrator of the PTG Pension Plan failed to provide both a Redetermined ATB plus a CB/CAM to employees who bridged service.

In this action, Plaintiff asserted the following claims under the Employee Retirement Income Security Act of 1974 (“ERISA”) against the Defendant Plan: (1) failure to provide proper notice during the administrative process of Plaintiff’s claim (Count I); (2) failure to properly interpret Section 3.4(d)(3) of the Plan and an order requiring that the Plan pay benefits in accordance with the proper interpretation of the Plan (Count II); (3) alternatively, in the event that Defendant’s interpretation of the terms of the Plan was correct, a determination that the terms of the Plan violated ERISA (Count III); (4) to the extent that Defendant’s failure to pay benefits was based on an amendment to the Plan, a determination that reliance on such an amendment violated ERISA (Count IV); and (5) failure to calculate benefits under the Special ATB provision (Count V). Counts II and IV were certified on behalf of a class.

Class Action Allegations

This lawsuit is brought on behalf of the following persons:

(1) Participants of the PTG Pension Plan, who meet the following requirements:

(a) who terminated their employment on or after March 22, 1996 with a company that participated in the PTG Pension Plan;

(b) who were eligible for an Accelerated Transition Benefit (“ATB”), which, because they had not attained the requisite age or years of credited service, was subject to an ATB Discount;

(c) who were subsequently rehired by a company that participated in the PTG Pension Plan on or before October 31, 1997, and worked at least five additional years; and

(d) either (i) at their next termination, did not have their benefit calculated to include both an ATB adjusted to reflect their age and term of employment and a cash balance benefit (or a Career Average Minimum benefit) based on allocations to their account since rehire as set forth in section 3.4(d)(3) of the PTG Pension Plan or (ii) are still employed at a Participating Company.

(2) Beneficiaries of any of the persons described in Group 1.

The Class consists of both participants who elected to take a lump sum payment at first termination (“Lump Sum Class Members”) and those participants eligible to receive an annuity after first termination (“Annuitant Class Members”).

Current Status of the Case

On June 14, 2010, Plaintiff filed his motion for class certification. Following a hearing on the motion, the Court issued an order on August 31, 2010 granting Plaintiff’s Motion for Class Certification. Following the Court’s order on Class Certification, Plaintiff filed a motion to modify the class definition as well as a motion to amend the complaint. Both of these motions were heard by the Court on February 7, 2011 and were subsequently granted on March 1, 2011. Plaintiff filed his Second Amended Complaint on March 18, 2011 and the Defendant filed an answer to the Second Amended Complaint on April 15, 2011.

Pursuant to an order from the Court, Plaintiff sent a Notice of Pendency of Class Action to each member of the Class in July of 2011. You can also obtain a copy of the notice and read the summary notice here.

Prior to August 31, 2011, the Plan interpreted Section 3.4(d)(3) so that it only applied to immediate annuitants and not to participants who received a lump sum of the ATB (“Lump Sum Class Members”) or deferred receipt of an annuity (“Annuitant Class Members”). On August 31, 2011, the fiduciaries of the Plan issued a new decision on its interpretation of the Plan and determined that Annuitant Class Members were entitled to benefits under Section 3.4(d)(3). Subsequently, the Plan formally agreed to pay the benefits in Section 3.4(d)(3) to those class members who were eligible to receive an annuity after first termination (i.e. those that did not take a lump sum).

With respect to the Lump Sum Class Members, the Parties filed cross motions for summary judgment on February 13, 2012. On May 10, 2012, the Court granted summary judgment for Plaintiff on Count I and granted summary judgment to Defendant on Counts II with respect to the Lump Sum Class Members and on Count V. Thereafter, the Parties submitted a plan for and began to engage in discovery on the remaining claims, namely Count III and IV. Plaintiff decided not to pursue the claims asserted in Counts III and IV and requested on November 13, 2012 that the Court dismiss those claims – without prejudice as to any members of the Class -- in order to take an immediate appeal of Count II. On April 17, 2013, the Court ordered final judgment in accordance with partial summary judgment and partial dismissal of remaining claims.

On May 17, 2013, the Plaintiff filed a notice to appeal the Court’s summary judgment decision on Count II against the Lump Sum Class Members to the Ninth Circuit Court of Appeals. On January 6, 2014, Plaintiff filed his Opening Brief with the 9th Circuit. Defendants filed their answering brief on April 7, 2014. Plaintiff’s reply was filed on May 7, 2014. Oral argument on the appeal took place on October 20, 2015 in San Francisco. On November 13, 2015, the Ninth Circuit upheld the District Court’s summary judgment decision on Count II against the Lump Sum Class Members.

Whom To Contact For More Information

If you are a current or former participant in the PTG Pension Plan and terminated your employment with Pac Bell or affiliated company that participated in the PTG Pension Plan after March 31, 1996 and were thereafter rehired, you may be a member of the class in the present litigation. Please contact Cohen Milstein via our toll free number, email or mail, to learn more about the case.